Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Rosneft Takes Lead in Sinopec Deal at Sakhalin

Rosneft has taken majority control of a large offshore field near Sakhalin Island through a deal signed with China's Sinopec, Rosneft announced Thursday.

Rosneft and Sinopec, China's No. 2 oil major, are jointly developing the Veninsky oil project, a part of the Sakhalin-3 block, through Venin Holding.

A subsidiary of state-controlled Rosneft will hold 74.9 percent in the holding company, after buying 25.1 percent of shares from the Sakhalin Oil Company, controlled by the regional government.

Sinopec maintained its holding at 25.1 percent in the deal signed Monday, Rosneft said in a statement.

Venin Holding, in turn, is the sole shareholder in Venineft, which owns the license to develop Veninsky and operates the project, the statement said.

Division of the project's expenditure is flipped, with Rosneft providing 25 percent of funding and Sinopec 75 percent. Nearly $70 million has been invested in the field so far.

The deal was signed on the first day of Chinese President Hu Jintao's three-day trip to Russia.

President Vladimir Putin has said Rosneft and Gazprom would retain majority control over all offshore projects. The projects on Sakhalin, in the Far East, are being developed mainly to feed energy-hungry markets in Asia.

Sakhalin-3's Veninsky block is estimated to hold nearly 170 million tons of oil and 258 billion cubic meters of gas. Rosneft was awarded the Venineft license in 2003, and signed a preliminary deal with Sinopec to develop the fields in August 2005.

Sakhalin-3 comprises four blocks, and Veninsky is the only one to have been licensed.

Deputy Natural Resources Minister Alexei Varlamov said last month that the rest of the licenses would be awarded through auctions by the end of the year.